China shows why Asia’s casino bubble was always doomed

China shows why Asia’s casino bubble was always doomed

The house always wins. Just not in Macao, where this gaming industry maxim is being turned on its head. A plunge in casino-related stocks has analysts pointing fingers, junket operators reeling and investors taking chips off the proverbial table.

This losing streak is a long time coming. And, not surprisingly, it bears China’s fingerprints. As part of President Xi Jinping’s crackdown on, well, everything, Beijing is tightening its grip on the world’s biggest gambling hub.

Macao’s going-bust moment is a tantalizing microcosm of how Asia’s casino bubble was always destined for failure, even without COVID-19. And, more immediately, why new Yokohama Mayor Takeharu Yamanaka made the right call by walking away.

Yamanaka recently delivered on a campaign promise to withdraw the city’s bid to bring Las Vegas to the Greater Tokyo region. This, of course, made Yamanaka persona non grata in Liberal Democratic Party circles, which went all-in on casinos.

The gripes about gaming are many. They include worries about gambling addiction, increased personal bankruptcies and crime. The specter of the Las Vegasization of Japan is the best news the yakuza and loan sharks have had in decades.

There are bigger reasons why Yokohama’s anti-casino stance is the right one that other cities and prefectures should emulate.

The wager was that the fast-exploding ranks of mainland millionaires would flock to Japanese casinos and drop fantastic sums of cash. Perhaps they would hit Ginza for shopping and plan onsen hot spring weekends. Yet the real business of Japan’s casinos will, just like Macao’s, revolve around the VIP rooms and baccarat tables that Chinese high rollers prefer.

Trouble is, this is the model being followed in Singapore, South Korea, Malaysia, the Philippines, Vietnam, Cambodia, Saipan, Australia and Russian cities like Vladivostok. Commodity markets are the world’s biggest leveraged bet in China’s nouveau riche enriching the globe. The gaming industry seems a close second.

That is until Asia’s biggest economy stumbles — or Xi’s regulators single you out for a reckoning. Jack Ma’s Ant Group marked the first wave of Xi-era crackdowns, followed by Didi Global, Tencent Holdings and a fast-growing list of industries.


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